Insurers are taking a heightened interest in aviation assets as yields soften on the more traditional investment vehicles for insurers and pension funds that typically seek to buy and hold investment grade rated paper. Although the market has always attracted insurance investment – AIG and ILFC, Pacific Life and ACG – insurers and funds are seeking to invest in aviation assets from one off aircraft deals to broader securitisation products and the latest Emirates Islamic Sukuk attracted a great deal of insurance investors. But it is not about participating in deals sold to them, insurers, we are told, are approaching airlines directly to proactively discuss ways they can invest in their assets. For airlines with significant funding requirements, which are many as the delivery schedule heats up, this is an attractive source of additional liquidity. However most have strict investment criteria and many are limited to investing in investment grade credits or paper – that’s what makes the EETC and ABS products so attractive right now. Insurance companies in China too are entering the aviation market since the country’s rules were relaxed on areas they are permitted to invest in, which means they are seeking for higher yields that aviation products can provide.
Insurers renewed appetite for aviation assets
